The Joys of Socialism

Oil-rich Venezuela ushered in 2010 with new measures rationing electricity use in malls, businesses and billboards, as Hugo Chavez's government aimed to save power amid a crippling drought.

The new regulations came into effect January 1, with businesses required to comply with reduced consumption limits and authorities warning of forced power cuts and rate hikes if the measures are not followed.

A decree published on Christmas Eve states that commercial centers may operate from 11:00 am to 9:00 pm on the electricity grid, but beyond that establishments would have to operate off-grid, using their own generators.

With the country in a widespread drought, late last year Chavez announced a sweeping campaign to reduce widespread energy "waste," stressing that rationing was necessary to avoid a systemic "collapse."

Shopping centers in Caracas Saturday opened at the appointed new hour, although industry representatives called for extending the time frame, arguing that night-time energy consumption is less than 10 percent of the total.

The power crunch is expected to have an impact on a wide variety of businesses, including cinemas, casinos and bingo halls.

Establishments failing to comply with the measures could face outages for a period of 24 hours, and up to 72-hour suspensions "in case of recidivism," according to the decree.

The regulation also orders businesses to institute savings plans aimed at shedding consumption by at least 20 percent, a measure that will be evaluated monthly by the newly-created ministry of electricity.

Tariff surcharges of up to 20 percent could be imposed on violators.

Rationing is also to apply to lighted advertisements.

Introductory measures were evident in Caracas last month, with the neon signs that traditionally welcome Christmas left unlit.

The state-controlled aluminum and steel industries halted some of their production lines in order to reduce energy consumption by some 560 megawatts (MW).

Electricity demand in Venezuela is more than 16,500 MW, far higher than what is currently generated. Experts say the power sector requires 18 billion dollars in investment through 2014.

In 2009 there were four nationwide blackouts, with daily failures common in several cities

CARACAS (Dow Jones)--Venezuela plans to battle the country's currency black market with "heavy intervention," President Hugo Chavez said Saturday, one day after announcing a devaluation of the bolivar.

In announcing the devaluation Friday, Chavez indicated the government would intervene in the thriving and legally murky black market, but provided few details.

The black market rate currently stands at about VEF6.25 for $1.

Government intervention could entail flooding the market with dollars to weaken the greenback and bring down the rate, perhaps until it reaches the official VEF4.3 rate. That could lessen the black market's relevance.

The president of this oil-rich nation also on Saturday cited a "weak" U.S. dollar against international currency as one of the reasons for his decision, announced Friday night, to cut in half the official value of Venezuela's bolivar against the greenback, to 4.3 bolivars per dollar.

"Every day our barrel of oil is worth less because of the weak dollar, because oil is priced in dollars," Chavez said.

The devaluation will help offset this, Chavez said, because now every time state oil company Petroleos de Venezuela, or PdVSA, goes to the Central Bank to change its dollars for bolivars, it will get VEF4.3 per dollar rather than VEF2.15.

Jan. 10 (Bloomberg) -- Venezuelan President Hugo Chavez said that businesses have no reason to raise prices following the devaluation of the bolivar and that the government will seize any entity that boosts its prices.

Chavez said heâll create an anti-speculation committee to monitor prices after private businesses said that prices would double and consumers rushed to buy household appliances and televisions. The government is the only authority able to dictate price increases, he said.

âThe bourgeois are already talking about how all prices are going to double and theyâre closing their businesses to raise prices,â Chavez said in comments on state television during his weekly âAlo Presidenteâ program. âPeople, donât let them rob you, denounce it, and Iâm capable of taking over that business.â

Chavez devalued the bolivar as much as 50 percent on Jan. 8 for the first time in almost 5 years, as last yearâs decline in oil revenue caused the economy to contract an estimated 2.9 percent, its first recession since 2003. The government set a multi-tiered currency system that Chavez says will stimulate national production by making imports more expensive.

Inflation Outlook

The devaluation may add to inflation by 3 percent to 5 percent this year, Finance Minister Ali Rodriguez said. The government forecast an inflation rate of 20 percent to 22 percent this year, after consumer prices rose 25 percent, according to the National Consumer Price Index.

The government also will âattackâ the so-called parallel exchange rate, which Chavez called âillegal.â

Venezuelans turn to the parallel rate when they canât get government authorization to buy dollars at the official exchange rate. The bolivar traded at 6.25 per dollar on Jan. 8, traders said.

âThey put the value of the dollar at more than 6 in an arbitrary and illegal manner,â Chavez said. âWe have to organize to reduce and attack that speculative, illegal dollar that hurts the Venezuelan economy so much.â

Well, that has to be a first, right-
someone who effectively elected themself president for life, actually DEVALUEING the currency to keep things afloat????

Whoa!!
Shoot, when he first came to power, I thought Chaves might just be a stabilizing, sensible influence in south american politics.

Turns out, he's just another nutbag dictator, that everyone (I use the term advisedly) voted for.

What is with these latin americans, anyway? I can understand why they all hate uncle sam, but electing a Pinochet in lamb's clothing?
Its Hama' in palestine over again.

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It costs about $1.50 to FILL your tank in Venezuela (12 cents per gallon). Try to imagine if someone ran for president here and told you that once he was elected, you would all have to pay gas prices about 25 times higher than you do now, do you think he would get elected?